South African empowerment Mvelaphanda Resources will hold 10,5% in Gold Fields and 15% of the gold miner’s South African operations once a R4,1-billion deal between the two companies has been concluded.
The empowerment deal was concluded at Gold Fields’ market value at just under R91 a share compared with the company’s closing price on Tuesday of R91,49, Gold Fields chief executive Ian Cockerill said.
“The deal is favourable as Mvela has the ability to inject equity and cash. The specifics of the funding haven’t been finalised yet. This is a sustainable deal for Mvela Resources and the deal is close to being a commercial one in all aspects,” Cockerill added at an investor presentation.
“The deal requires limited resources from our balance sheet. The deal won’t constrain us (Gold Fields). We are delighted to have Mvela as a significant partner,” he said.
Gold Fields is one of the world’s largest gold miners and produced 4,11-million ounces of gold in the 2002 calendar year while Mvelaphanda Resources, headed by executive chairperson Tokyo Sexwale, has interests in diamonds, platinum as well as oil and gas.
Mvela Resources bought a stake in Gold Fields as the company is a world- class global company with good assets like its South African gold mines Beatrix, Kloof and Driefontein, Sexwale said.
Black empowerment deals add value and Mvela Resources used its own funds and the company would be going on a road show to raise further capital, Sexwale added.
Department of Minerals and Energy (DME) Director-General Sandile Nogxina said at the same investor presentation that he was glad to see that Gold Fields’ Cockerill was “walking the talk” regarding the South Africa’s mining empowerment charter.
Nogxina also remaindered Gold Fields that the South African mining industry had agreed to the empowerment charter, which deals with the transformation of the South African mining industry.
“We had a very robust debate,” Nogxina added, regarding the negotiations around the charter.
“Some people say we were naïve and that we would never attain our goals. We were called dreamers,” he added.
Nogxina said empowerment deals were ‘do-able’.
Cockerill denied that Gold Fields had come under any pressure from the South African government to conclude an empowerment deal.
“We were already in discussions with Mvela regarding a deal (at our quarterly results in May),” he added.
Nogxina declined to comment whether the South African government had been unhappy with Gold Fields’ progress on empowerment. However, investors have been unhappy about Gold Fields’ progress on the empowerment charter that requires South African mining companies to sell 15% of their equity to empowerment concerns within five years of the charter’s promulgation and 26% within 10 years.
Until Tuesday, Gold Fields had little or no empowerment partner in its South African operations.
The Mvela deal will alleviate many of the concerns investors have about Gold Fields’ perceived lack of progress in achieving the empowerment charter’s targets.
Regarding the capital of about four-billion rand Gold Fields will receive for the 10,5% Mvela will buy in the company, Cockerill said the money would be ploughed back into the group’s existing businesses.
However, the brochure at the investor presentation said the money raised from the Mvela deal would be used as a “war chest for further growth”, possibly indicating the potential for acquisitions.
Under the agreement, Mvela will have the first right to up its stake in Gold Fields.
Mvela will raise the money for the acquisition through capital and debt raising as well as vendor financing at commercial rates capped at R300-million.
Under the agreement there is a 120-day period exclusivity agreement between Gold Fields and Mvela. – I-Net Bridge